Nifty Smallcap Slips into Bear Territory; Realty Down 30% from 52-Week High

The small-cap index on the NSE plunged into a bear market as retail investors rushed to cash out of an increasingly volatile market amid the worsening Russia-Ukraine conflict.

An index or stock is said to be in a bear territory when it falls 20% from the peak.

The Nifty Smallcap 100, which ended down 2% on Monday, fell into that zone on Monday. It is down 20.7% from its 52-week high of 12,047.45. Mid-caps are on the verge of getting into the bear zone.

The Nifty MidCap 100 ended at 28,865.90, down 2.4% from previous close and 19.2% from its 52-week high of 33,243.50.

Monday’s sell-off also saw the Bank Nifty, PSU Bank, Financial services, Realty, Auto and Media indices on the NSE in bear market zone. As of Monday’s close, the realty index was the furthest from its 52-week high, down nearly 30%. Private banks, the second-biggest laggards, down 23.4%. The Auto, PSU Bank and Media indices are down 20-23% off their 52-week highs.

“The risk appetite has reversed with the developments in Russia and Ukraine. The March quarter is different for many sectors, particularly rural-focused, consumer-facing sectors as there is going to be a significant increase in raw material costs due to the surge in crude and other commodity prices,” said Hemang Jani, head of equity strategy- broking and distribution at Motilal Oswal.

“One needs to be far more cautious in approach than look for pockets to buy as we are yet to see earnings damage because of these factors and how long it will continue.”

The FMCG index is also on the verge of entering the bear market zone as it is down 19.9% from its 52-week high.

The worsening geopolitical, inflation and commodity prices risks are pushing retail investors away from this segment after they piled on to this segment during the market rally that began in March 2020 and lasted till October 2021 without any major correction.

As this segment of investors pile on losses, they are preferring to exit the space. S-ET

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